FTSE 100 companies set aside higher legal budgets

Like squirrels hiding their acorns for fear of a cold winter, prudent FTSE 100 companies are setting aside higher legal budgets as the regulatory environment becomes chillier and concerns grow about how much it will cost in-house teams to keep them safe from litigation.

According to legal publisher, Sweet & Maxwell, the legal liabilities reported by the FTSE 100 companies jumped by 22 per cent last year to £22.1 billion - up from £18.2 billion the previous year.

This means they are likely to prepare more intently for 2013 in a bid to avoid facing major legal action, reports Sky News.

Managing director of Sweet & Maxwell, Teri Hawksworth, said: "When the credit crunch started there was the expectation that legal liabilities would rise as commercial pressure led to more litigation between companies."

However, she admitted that firms did not anticipate that many of their costs would stem from clashes with regulatory bodies, which have taken on more powers in recent years in a bid to avoid the problems that led to the credit crunch in the first place.

This means aggressive fines were the biggest costs faced by companies in 2013.

The banking industry saw the sharpest rise following a year in which it was forced to pay out billions of pounds to customers after the payment protection insurance scandal.

"In-house counsel is moving from a role of just managing the costs of external law firms to clear up after a problem to taking a bigger role in ensuring that legal problems do not arise in the first place," concluded Ms Hawksworth.